According to the Department of Foreign Affairs and Trade, trade in goods and services between the two countries has grown in value from $13.6 billion in 2007 to $30.4 billion in 2018.
India is an awakening giant with a population of over 1.3 billion. The country’s relatively young population and projected growth present significant trade opportunities for the Australian economy across sectors such as education, agriculture, energy, resources, tourism, healthcare, financial services, infrastructure, science and innovation and sport.
However, the potential for an expansive trade partnership has been stifled by unsuccessful negotiations regarding a free trade agreement. There have been nine rounds of negotiations since 2011, but the two countries have yet to reach a settlement.
Would an Australia-India free trade agreement be beneficial?
Exports from Australia to India have grown rapidly in recent years. India was the eighth most important trading partner for Australia and the fifth-largest export market for Australian services in 2018-2019.
On the other side of the trade, Australia is also an increasingly important destination for Indian exports in value. India’s exports to Australia grew by 10.8% over the five years up to 2019.
In light of these trends, Australia would benefit from having equal access or, even better, preferential access to the Indian market. Australia’s financial stability has developed due to our ability to export manufacturing inputs to countries like China, Japan and Korea. As each of these strong manufacturing economies developed, benefits have flowed to Australia.
These case studies present a good argument for becoming a major trading partner with India as well.
In fact, the Centre for International Economics estimates that over a 20-year period an Australia-India FTA could result in a net increase in Australia’s GDP by up to $43 billion and India’s GDP by up to $46 billion.
When could an Australia-India FTA happen?
India already has several free trade agreements in place, most notably the South Asia Free Trade Agreement (SAFTA), India-ASEAN Comprehensive Economic Cooperation Agreement (CECA), India-Korea Comprehensive Economic Partnership Agreement (CEPA) and India-Japan CEPA.
When Australia and India settle on an FTA remains to be seen, but Prime Ministers Scott Morrison and Narendra Modi have mutually agreed to discuss a potential deal based on earlier negotiations as part of the Comprehensive Economic Cooperation Agreement (CECA) released in June this year.
After nine years of negotiations, we may finally see an Australia-India free trade agreement come to fruition.
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